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What should investors do with the HDFC Bank stock post Q1 results?

The bank has reported a 19.6 percent year-on-year growth in standalone profit for the quarter ended June 2020,
Jul 20, 2020 / 09:38 AM IST

HDFC Bank share price rose 4 percent in early trade on July 20 after the bank reported its first quarter results on July 18.

The bank reported a 19.6 percent year-on-year growth in standalone profit for the quarter ended June 2020 led by lower tax cost and NII. However, elevated provisions, and lower other income due to slowdown in economic activity limited profit growth.

Profit during the quarter increased sharply to Rs 6,658.62 crore compared to Rs 5,568.16 crore in the same period last year.

Net interest income in Q1 FY21 climbed 17.8 percent year-on-year to Rs 15,665.42 crore supported by healthy loan growth of 21 percent in the quarter and deposits growth of 24.6 percent. Net interest margin for the quarter stood at 4.3 percent.

Also Read - HDFC Bank Q1 profit jumps 20% to Rs 6,658.6 crore, loan growth lifts NII 18%

Nomura | Rating: Buy | Target: Rs 1,325

Broking house is confident about the company’s ability to navigate the current crisis and expects the bank to gain market share (11%/15% growth For FY21/22).

Nomura forecasts 15%/17% RoEs with 165 bps/135 bps credit cost for FY21/22, reported CNBC-TV18.

Kotak Institutional Equities | Rating: Add | Target: Rs 1,200

The company has reported 20% YoY earnings growth on the back of 15% operating profit growth. Its loan growth is impressive at 20% YoY but led by the non-retail.

NIM held up at 4.3% QoQ, aided by strong growth in CASA, while sharp decline in revenue growth is an area of risk. The positive outcome on credit costs would help maintain its premium, reported CNBC-TV18.

Citi | Rating: Buy | Target: Raised to Rs 1,350 from Rs 1,225

Wholesale drove the growth, while moratorium was at 9%. Its contingency buffer has increased. Deposits were strong, while retail loans declined QoQ.

The strong franchise, tight underwriting give bank an edge over its peers, reported CNBC-TV18.

Jefferies | Rating: Buy | Target: Raised to Rs 1,350 from Rs 1,280

The company has delivered 20% YoY earnings growth despite COVID-19. The risk to asset quality is to abate with the high quality loan book, while tighter new lending in the retail segment could drag the NIMs.

The topline & costs have surprised positively. Raised earnings estimates by 15.6% / 5.5% / 5.4% for FY21/FY22/FY23, reported CNBC-TV18.

CLSA | Rating: Buy | Target: Raised to Rs 1,450 from Rs 1,250

The company seems to be passing the biggest asset quality test. The results were strong in the context of Covid-19 disruptions.

The management commentary on assets across verticals was even stronger. The moratorium level, at 9% of loans, is the lowest in the industry.

It has increase FY22/23 earnings by 6%-9%. The commentary on asset quality & clarity on new CEO should drive a rerating, reported CNBC-TV18.

At 09:23 hrs HDFC Bank was quoting at Rs 1,130.60, up Rs 31.45, or 2.86 percent on the BSE.
Moneycontrol News
first published: Jul 20, 2020 09:38 am
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